How Qualys Will Continue to Grow in 2019

Business Overview

Qualys Inc., founded in 1999, is a leading provider of cloud-based security and compliance solutions. Qualys aids organizations by consolidating security and compliance solutions into a single platform. 

As a pioneer in the SaaS security space, Qualys has earned significant credibility in a high-demand market predicted to reach $16.49 billion by 2023, at a Compound Annual Growth Rate (CAGR) of 16.9% from 2018 to 2023 according to Business Wire.

Since 2018, Qualys has raised 34 million in Series C funding and made three acquisitions since according to Crunchbase. In addition, their success in the market has also led to partnerships with cloud mammoths like Amazon Web Services, Microsoft Azure, and the Google Cloud Platform.

In their Q2 2019 financials release, Qualys reported $78.9 million in net revenues, citing, “With almost 24 million Qualys Cloud Agent subscriptions at the end of Q2, we are clearly solving a critical problem in security by providing a technology platform that enables organizations to consolidate the plethora of point solutions.”

Business Accomplishments

Thanks to it’s single platform solution, Qualys is enabling businesses to make their digital transformation seamlessly and achieve greater agility, better outcomes, and significant cost savings.

Their momentum as earned them some notable achievements including selection as the provider of record for the continuous monitoring of internet-facing digital certificates and SSL/TLS configurations for the Center for Internet Security (CIS). As well as a partnership with Coalfire that will integrate Qualys’ vulnerability management and continuous monitoring capabilities into Coalfire’s Secure Cloud Automation Services (SCAS).

In addition, Qualys has had two successful releases. One, a new Cloud Agent Gateway (CAG), a major extension of the Cloud Agent Platform, which streamlines large-scale deployments across on-premise and hybrid cloud environments. The other, a re-release of it’s Global IT Asset Discovery and Inventory app which includes a free version for all businesses to use.

Prognosis: Positioning in the right Markets is Key

Qualys faces numerous challenges ahead including increased IT infrastructure complexities and the availability of free security services and security solution suites. While they have attempted to address this with the re-release of the Global IT Asset Discovery and Inventory app and a push to bring awareness to cloud-security best practices, it remains to be seen if it will be enough to stave off churn? 

Furthermore, the rapid adoption of cloud-based services among Small and Medium-sized Enterprises (SMEs), a relatively small portion of the total available market (see Cloud Security Market Profile), poses a significant challenge to their growth. 

This compounded by the fact that the Banking, Financial Services, and Insurance (BFSI) sector is forecasted to gain the highest share of the security as a service market. Therefore, it will be imperative for Qualys to position aggressively to secure a competitive advantage against competitors like TripWire and Tenable. 

Intricately Analysis

The data in this report is provided by Intricately’s global sensor network which collects data on digital product usage, applications, and traffic. Intricately provides detailed insight on more than 7M businesses worldwide and the product usage intelligence on 21,000+ cloud products.

We are collecting this data from the public internet, we are not in-line (from a traffic perspective), nor do our customers provide us with any usage data. This means we are able to monitor publicly-accessible products and infrastructure. Although increasingly, many on-prem and behind-firewall products have a public component to their product, which our sensors are able to monitor.   

Intricately has conducted an analysis of Qualys’ customer base to identify key trends and competitive insights to inform future growth strategy. 

Total Addressable Market

Intricately is able to determine if a company needs to modernize its infrastructure, which happens to be Qualys’s primary value proposition. Anyone with a need for modernizing their infrastructure represents a business opportunity for Qualys. We see roughly 2.5M companies that represent a business opportunity. 


Our proprietary analysis reveals that, as a leader in helping companies modernize their IT, Qualys has a total addressable market of 2.5M companies, with the largest share, 74%, belonging to companies with less than 10 employees.

This shows Qualys is likely to be extremely competitive at acquiring customers among Startups. However, with a growing propensity for Startups to bootstrap and cut costs across the board, limited growth can be expected unless low-cost/free services are provided or customer acquisition is increased. 

This is something Qualys will have to keep in mind considering they reported deceleration of revenue growth for the fourth quarter in a row

Qualys value proposition increases when a company deploys a complex mix of applications. We broke down the segment even further by looking at companies that deploy at least 500 applications. Only 9,700 companies around the globe deploy at least 500. While much smaller, this segment represents a significant revenue upside and should be prioritized.



Continuing on the theme of complexity, we evaluate companies that both on-premise infrastructure and cloud infrastructure by the amount of cloud spend required to service it. We see over 30K companies that spend $100k/mo on cloud services that have complex IT systems. For Qualys, this segment represents companies with money to spend and big problems to solve.

With the bulk of the available market being Startups, it’s no surprise that 28% have an average spend of less than $1K/mo with the bulk of the market spending under $10K USD per month on cloud security services. It’s hard to imagine significant revenue coming from this segment.

In addition, identifying companies within their current customer base whose growth indicates they have the capacity for higher spend on security solutions will be a significant upsell revenue opportunity for them.

Competitive Analysis

(Source: G2 Cloud Compliance comparison and 2019 rankings)

While the cloud compliance space is crowded, the performance of Qualys’ competitors varies minimally. With little variation in performance, Qualys will have to rely on their features and benefits as a differentiator. With a strong outlook for encryption services over the next five years, identifying the customers with a strong likelihood to buy these services may be the key to continued competitive advantage. 

According to current G2 rankings, Qualys scores a 4.0 in customer satisfaction which is in line with its competitors. The following graph further illustrates the point that Qualys must differentiate itself in ways outside of performance to gain traction amongst leading competitors.

Summary

Overall, our analysis reveals that while Qualys has established a strong position in the cloud security space, they need to shift focus from low spend Startups to high spend SME’s who deploy a complex set of applications. Prioritizing this segment of the available market will be key to pipeline development and lead prioritization. 

In addition, identifying the companies in their core customer base that are in a position to increase their spend will be critical to remaining competitive and breaking the cycle of decelerating revenues. This is also something Intricately’s algorithms can spot - Spend potential and revenue growth!

Where We Sourced This Data

Intricately monitors the adoption, usage, and spend on 21,000 distinct cloud products and analyzes the usage of more than seven million companies worldwide. Using its proprietary Global Sensor Network, deployed in more than 150 points of presence (PoPs), Intricately has a comprehensive view into how organizations deploy, utilize, and invest in their digital products and applications (click here to see a list of products we monitor).

We hope you enjoyed reading this report. Our Enterprise Platform helps leaders across cloud marketing and sales organizations forecast, prioritize, and close opportunities faster. Let our team give you a demo of our product today.

Note: The data in this report has been collected via Intricately’s proprietary Global Sensor Network. 

7 million companies evaluated

21,000 unique cloud products monitored


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